TotalEnergies chief calls potential EU sanctions on Russian LNG a financial boon

Reuters

Published Apr 26, 2024 16:37

By America Hernandez

PARIS (Reuters) - Sanctions on Russian gas from the Yamal LNG project would cause prices to spike and profit global gas sellers including TotalEnergies (LON:TTEF), chief executive Patrick Pouyanne said on Friday, in response to an analyst question about the impact of potential EU sanctions.

KEY QUOTES

"If the EU sanctions Yamal LNG, the price of LNG will go up quickly and globally our portfolio will benefit," Pouyanne said.

"It's a positive if there were sanctions, not a negative, because the cash from Yamal is quite limited," he added.

"European leaders understand that their security of supply today relies on LNG and they don't want again to see price rises... what I understand is that they might have some ideas, but from 2027 on, not before," he said.

CONTEXT

The French energy major has a 20% stake in the Yamal LNG project in eastern Russia, which is majority owned by private Russian LNG producer Novatek.

TotalEnergies also holds a 19.4% stake in Novatek.

Pouyanne said the company did not receive a dividend from Yamal LNG since 2023, as sanctions on financial transactions with Russia make it difficult to get money out of the country.

It received about $450 million in half-year dividends from Novatek in late 2022.

European natural gas prices reached record highs following the loss of Russian supplies in 2022, as the EU imposed financial and other sanctions on Moscow to punish it for invading Ukraine.

New global LNG capacity will be limited until 2027 when more projects come online, meaning Europe will continue competing with Asian and other buyers for limited cargoes until then, pushing prices up.

WHY IT'S IMPORTANT

Several EU countries have called to impose sanctions on Russian LNG, though the required unanimity among members for such a measure to pass does not exist.